To keep you informed about developments in public finance tax, our Public Finance Tax Practice publishes the Public Finance Tax blog. After 2017 closed with a bang, when Congress passed the Tax Cuts and Jobs Act (TCJA), which eliminated tax credit bonds and the tax-exempt advance refunding of tax-advantaged bonds, we spent 2018 muddling through the aftermath. Then, the final weeks of 2018 closed with a bang, too, when Treasury, notwithstanding the government shutdown, released final private activity bond public approval requirements and proposed regulations, which we had awaited for over 30 years, regarding when tax-exempt bonds are reissued. On the blog, we followed these changes, explored some fundamental questions about the TCJA and reviewed the year-end regulatory flurry. Below, we have described more highlights from 2018, and have attached links to the posts on the blog. To make sure you get up-to-the-minute alerts and information, we encourage you to subscribe to the blog, by clicking here.
As we know, the TCJA eliminated the ability to issue tax-exempt advance refunding bonds after 2017. Though that sounds simple enough, you know better by now questions lingered. In particular, in the first few months of 2018, the tax-exempt bond community wondered whether tax-exempt bonds could still be issued to advance refund taxable bonds. The IRS ultimately made it clear, after NABL wrote a letter drafted in part by our Tax partner, Johnny Hutchinson (the current chairman of the NABL Tax Law Committee), requesting clarifying guidance, that you can still issue tax-exempt bonds to advance refund taxable bonds. Thus, the repeal prevents the issuance of tax-exempt bonds to advance refund only (1) other tax-exempt bonds and (2) a very limited subset of taxable bonds that enjoy the benefit of a tax credit or a direct payment.
To turn the familiar Biblical phrase (not to mention English grammar itself) on its head, the TCJA "tooketh away," but it also "gaveth." The TCJA quietly created a new economic development program, called the Opportunity Zone program. We closely followed this new program, which enables economic development in low-income communities. The program allows individuals to defer (and potentially avoid) gain on the sale of stock or other property if the gain is reinvested in a low-income community through an Opportunity Fund. Our Tax partner, Steve Mount, continues to lead the charge in explaining this program and guiding our clients on how to avail themselves of it.
The US Supreme Court paid a visit to our corner of the world, rendering its opinion in South Dakota v. Wayfair. We tracked this case, which overturned two previous decisions and held that a vendor need not have a physical presence in a state to have a "substantial nexus" with the state under the Commerce Clause. Thus, an online vendor need not have a physical presence in a state to be obligated to collect sales/use taxes on sales made to residents of that state and to remit those taxes to that state.